Certain foods made available by the USDA are difficult to use in the recipient agency food service operation in their basic form and at certain times more of a commodity food is available than can readily be used by recipient agencies. In order to make these commodities more conveniently available, NJDA contracts with commercial food processors who use the USDA commodity as ingredients in the production of a finished product.

For example, bulk cheese is not a desirable commodity to most schools. Therefore the NJDA contracts with a processor to use the cheese as an ingredient in frozen pizza. The Pizza is then sold by the processor directly to the recipient agency at a cost reduced by the value of the USDA cheese contained.

The NJDA has processing contracts with about 40 manufacturers. These processors receive close to 6 million pounds of USDA commodities for conversion into nearly 1,000 different approved finished products. Representative samples of all products are evaluated by Rutgers University Food Science Department prior to NJDA approval to assure that they are nutritionally sound and of high quality.

USDA commodities are provided to processors in on of two ways:

Direct Diversion via the Processor Selection System- Under the Processor Selection System, contracted processors solicit participating recipient agencies directly during a specific time frame, known as the selection period. Recipient agencies may assign any amount of their fair-share of any available commodity to the processors of their choosing. At the close of the selection period, the NJDA tallies the results and arranges with the USDA to ship the appropriate amounts to the processors. Sales of finished products occur throughout the school year with specific arrangements made between the recipient agency and the processor.

Processing by Recipient Agencies-Some commodities do not lend themselves to be directly diverted to processors, certain processors may not be able to receive a diverted shipment or recipient agencies may desire to process additional quantities. In those instances, recipients may provide approved processors with their pro-rata share of commodities as allocated from the NJDA contracted warehouse or from inventory on hand. This type of processing is commonly known as backhauling.

The NJDA assess’ an administrative fee of $1.45 per case for finished products received via the commercial processing program.